Limited Liability Companies (LLCS)

Tax Planning for Offshore Companies

Tax Planning for Offshore Companies

Tax planning consists in designing strategies to ensure the sustainability of the company, the increase in the assets of its owners and the employment generation by attenuating the tax burden without neglecting the tax responsibility. This optimization of financial resources will always be held in the framework of the laws governing the country where your company starts operating offshore.

These alternatives may be explicitly stated in the law, while in other cases the benefits are implicit in the interpretation of various tax and non-tax laws. In this sense, it is essential to clarify that tax planning has nothing to do with tax evasion since such conduct is considered illegal and may cause your business substantial tax fines and penalties. The tax planning for an offshore company must cover the following key aspects:

Taxes that affect the company. In the case of offshore companies, it is important to be fully aware of which taxes the company is exempt from according to the professional activity it carries out and which are paid monthly or annually.

Incorporation of a company that has an effective legal framework and gives you the biggest tax exemptions and benefits.

Areas of the company should consider the tax aspect. Tax planning affects all sectors of a company, not just the financial area.

Strategies to reduce tax burden according to each company. Within each tax planning strategy, the rules and regulations in force should be considered. Keep in mind that the stability of the tax laws in offshore countries provide those starting a business there absolute security exemption from taxes on the sale of products or services performed abroad.

While there are no general solutions applicable to all cases, in order to plan its financial strategy a company should follow these steps:

Analysis of your company and the legal and financial context that governs it. Define the objective you want to achieve and study the tax laws affecting your company and its business practices. Discuss the accounting, financial, legal and tax aspects of your company.

Determine possible solutions from the diagnosis of the information gathered in the previous step. Depending on the commercial operations you want to undertake, consider and discuss all possible tax combinations that may be available for your company.

Decision making and implementation of tax strategies. At this stage, make sure that you are not breaching the country's laws and that you are fully aware of the administrative costs and the reduced tax amount.

This tax planning should be accompanied by documents that support and validate the legitimacy of the operations undertaken for your company.

To design a successful tax planning, Delvalle & Delvalle suggests discussing every detail with your lawyer and accountant so they can advise you on the tax and non-tax laws that govern your offshore company and the best strategies to follow according to the legal framework of the country the company will be operating on.